Emissions target not enough for unguided industry

Environment Minister Greg Hunt with Prime Minister Tony Abbott and Deputy Prime Minister Julie Bishop at the emissions target announcement in July.

Environment Minister Greg Hunt with Prime Minister Tony Abbott and Deputy Prime Minister Julie Bishop at the emissions target announcement in July.

The federal government’s carbon emissions reduction target of 26 to 28 per cent by 2030 marks a promising start to the country’s climate policy, but it is still way off being an accurate guide for dependent industry.

Prime Minister Tony Abbott in a joint statement with Environment Minster Greg Hunt yesterday confirmed the target in the lead up to the United Nations Climate Change Conference held in Paris in November.

The Prime Minister’s decision came despite calls from the government’s own Climate Change Authority for a 40 to 60 per cent cut by 2030 based on 2000 levels, and the Climate Institute calling for a 45 per cent cut by 2025.

The government statement reasoned that the 26 to 28 per cent reduction will strike the right balance between environmental and economic responsibilities, and alleged that emissions per person will decline by at least 50 per cent between 2005 and 2030, while emissions per unit of GDP will fall by 64 per cent.

Energy Supply Association of Australia CEO Matthew Warren welcomed today’s news, saying the target was credible and a step in the right direction.

“The Government’s target is significant because it shifts the focus onto how we are going to deliver sustained and substantial reductions in emissions across the economy for the rest of this century,” Mr Warren said.

“(But) we won’t be able to buy our way to 26-28 per cent and beyond. We will need a credible, durable and bipartisan carbon policy to achieve this target.”

What options are there for gas?

ESAA managing director of policy Kieran Donoghue said without any stable policy outlook, the future for gas remains in paralysis.

“It is almost impossible to evaluate where new gas developments sit without long-term consistency in the political spectrum on this issue. Whereas if we had that (policy) it would be easier to see how a new gas development would be consistent with the government’s policy ambitions,” he says.

“From the ESAA’s point of view, gas has the capability to play a valuable transitional role, though at this stage it is hard to know exactly what that will look like.”
The ESAA general manager listed emissions offset regimes and carbon capture storage technologies as two areas where gas could improve its suitability to a more climate-focused policy environment.

“There are also potentially interesting opportunities for using plant materials to convert into gas, which effectively should be carbon neutral over the full life cycle. But which of those things becomes useful in the long term, we will only find out if we have the right policies in place to allow development of the most cost-effective options.”

The right policy

Currently there are four LNG developments in operation across Australia with another six – including two world first floating LNG projects – in the pipeline and expected to come on stream by 2020, effectively trebling production in the coming decade.

And with such a promising economic impact on the horizon, the ESAA policy director says gas would not be forgotten in a new climate policy framework.

“Good climate policy is always going to be informed by the direction and travel of the economy,” Me Donoghue says.

With Australian industry awaiting decisions from the government on climate policy, Mr Donoghue sees two potential outcomes for an effective, holistic framework to guide industry over the coming decades.

The first, he says, is the “most straightforward”, a policy that prices emissions across the board at a single rate.

“But given the fact that we as a community have already rejected such a policy framework rather recently, I doubt that will be on the agenda,” he laughs.

The other, he says would price carbon emissions specific to each industry with as many elements and activities across the economy covered by a range of policies.

Enter your details to subscribe to the free fortnightly Gas Today e-newsletter

Thank you for signing up for the Gas Today Online Update.